Ministry of Home Affairs: “Regional Governments tend to stockpile budgets”

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Minister of Home Affairs Muhammad Tito Karnavian. (Photo: Kemendagri)

IO – Minister of Home Affairs Muhammad Tito Karnavian encourages Regional Governments to accelerate their actual disbursements for goods and services. He emphasizes that Central and Regional Government expenditures are among the mainstays of national economic growth during the pandemic. 

The Ministry of Home Affairs made the effort to accelerate Regional Government expenditures by issuing a Joint Circular of the Minister of Home Affairs and the Head of the Government’s Procurement Policy for Goods and Services Agency (Lembaga Kebijakan Pengadaan Barang/Jasa Pemerintah – “LKPP”) Number 027/2929/SJ and Number 1 of 2021 concerning the Acceleration of Procurement of Goods and Services in Regional Financial Management. “This Joint Circular is extremely important, because it may serve as both a legal and procedural basis for Regional Governments when procuring goods and services,” Tito declared on Tuesday (01/06/2021). 

Tito went on to say that accelerating actual expenditure is expected to circulate more specie among the people, which will leverage buying power at household level, which in turn will accelerate national economic growth. “Therefore, I hereby instruct Regional Heads to increase their capital expenditures in the Second Quarter of 2021. I repeat, this kind of expenditure will directly affect the people. The Second Quarter of any year is key to improving yearly growth of the national economy. Again I ask my friends the Regional Heads, please pay special attention to the proportion of capital expenditures,” he said. “And also please make sure that capital expenditures emphasize work-intensive programs, in order for the cash flow to benefit as many of our citizens as possible, especially Micro, Small, and Medium-Sized Enterprises (Usaha Mikro, Kecil, Menengah – “UMKM”). However, please don’t buy just out of pity – make sure that all goods and services that we obtain through UMKMs consider value-for-money, i.e. both price level and quality.” 

On a different yet still relevant note, the Ministry of Home Affairs has discovered that our Regional Governments tend to squirrel away their budgets in bank accounts. At the end of April 2021, this amounted to nearly IDR 200 trillion. Ministry of Home Affairs’ Director General of Financial Direction, Mochammad Adrian, reported that the same thing occurred last year. In fact, the amount of monies being stockpiled this year is bigger. “In March 2021, our banks held IDR 182.33 trillion of our Regional Governments’ unused budget. Later, it increased to IDR 194.54 trillion in April, as we reported earlier. If we compare this with the 2020 figures, the amount of the budget saved in banks has increased by IDR 3 trillion,” he stated at the Ministry of Home Affairs Office on Monday (31/05/2021). 

Adrian went on to say that even though the Law allows Regional Governments to deposit part of their budgets in banks to increase Regional income, this is not a wise step to take long-term, as there is a potential of corruption inherent in this policy. “If the Regional Government budget is transferred for the purpose of getting success fees for example, or for other personal purposes, that’s already a crime,” he said. 

Adrian went on to request that Regional Governments not stash away their budgets for too long. After all, warehousing budgets means there’s less to spend. Even now, Regional Governments only use up 21.98% of their allotted budgets. “I hope that Regional Governments quickly spend their monies boost the movement of regional economies. If we compare this use to the National Budget use by 25 May this year, 32% of the National Budget is already in use. We hope that Regional Governments can catch up with the lacking rate of expenditure, and if possible, get close to the National Budget expenditure,” he said. (eka)